The PayBito Chief addressed the flaws in current exchange models favoring institutional traders, suggesting cloud BaaS as a solution.
PALO ALTO, Calif., June 6, 2023 /PRNewswire-PRWeb/ -- Traditional exchange broker models are failing the average retail investor, causing financial exclusion and a lack of transparency. PayBito CEO Raj Chowdhury details how institutional investors have an unfair advantage, manipulating market volatility, and pricing information to their benefit, leaving retail investors at a disadvantage.
Double Standards in Brokerage Model:
Existing broker models have become increasingly susceptible to market volatility and trading volume shifts, allowing wealthy investors to manipulate the trajectory, which in turn, harms retail brokers and their clients. This double standard is causing harm to the average investor and creating an uneven playing field.
- Financial Exclusion: Slow Sign-Up and Cloud-Repellant Architecture
The brokerage models of major exchanges are outdated and do not offer BaaS or Quick Sign-up features. The absence of cloud architecture results in the requirement for server hosting and complex technical infrastructure. This restricts non-institutional traders from leveraging growth through brokerage service offerings.
- High Expenditure and Time Requirements
Traditional broker models come with a high price tag and steep requirements for entry. For example, the NASDAQ exchange broker model costs eligible participants anywhere between $5000 to $500,000, making it difficult for individual brokers to start a firm. Additional considerations also include a wait-in period of a minimum of 6 months.
- Institutional Traders Preference
Membership to global exchanges is restricted to large financial institutions, making it challenging for individual brokers to establish themselves. To gain entry, brokers are required to work under these institutions or maintain a continuous association with them. Furthermore, the infrastructure of the platform does not facilitate the setup of independent brokerage businesses.
- AI-Enabled Market Research
Chowdhury has recognized that artificial intelligence has been outperforming the financial markets for a significant period. Institutional investors and asset managers commonly utilize AI to gain improved analytical insights, conduct market research, and generate consistent returns. Unfortunately, not all traders can access these advanced resources due to the high cost involved.
- Unavailability of Algorithmic Trading
High-speed algorithms have the ability to execute trade decisions in a matter of seconds, giving traders a significant advantage around the clock, which cannot be replicated by humans. These algorithms are not influenced by emotions or biases and solely rely on data-centric actions to make trading decisions. Unfortunately, high-frequency algorithmic trading requires a complex and expensive infrastructure, making it accessible only to institutional investors.
- Insider Trading and Market Manipulation
Instances of market manipulation by powerful market makers are not uncommon. Exchanges, along with institutional members, have faced substantial fines for engaging in illegal transactions, but the latter are seldom removed from the platform. There appears to be a bias towards institutional members, including the ones associated with insider trading.
Access Discrimination and Lack of Transparency:
The implications of the aforementioned drawbacks have been proven time and again across incidents such as the LIBOR incident, the 2008 financial crisis, the 2010 Flash Crash, and many more. The exchanges have not made any noticeable amends, despite clearly having the resources to do so.
The PayBito Chief Raj Chowdhury states, "The traditional broker models have always favored the wealthy and powerful, but it's time to change that. We need to adopt a more democratic and inclusive approach to ensure that every investor has an equal chance to succeed."
Broker models of the world's largest exchanges are attributed to a lack of transparency, uneven access, and control over information, giving some investors an advantage over others. This results in an imbalance in the market, making it difficult for retail investors to make informed decisions. Chowdhury recommends the following steps as a solution:
- Transform Brokerage with BaaS and Quick Sign-Up
The implementation of Brokerage as a Service (BaaS) leverages cloud technology to democratize access to brokerage services. This modern approach enables traders from diverse demographics to obtain instant brokerage access, promoting financial inclusion. Additionally, the BaaS process eliminates installation hurdles like web hosting and coding, which makes the solutions scalable and easier to use.
- Make Brokerage Affordable
Brokerage platforms leveraging cloud-based BaaS can offer affordable pricing and streamlined sign-up processes. For instance, PayBito's broker platform enables users to complete registration in just three minutes and is priced at an affordable rate of $49.99 per month.
- Enhancing Financial Inclusion with Scalable Brokerage Services
In the modern era, financial inclusion and scalable brokerage services are critical for global exchanges. The key to increasing accessibility lies in eliminating high costs and operational complexities, such as coding, complex installations, and server hosting. Cloud-based platforms are the answer to these challenges, making it possible to enhance financial inclusion and empower brokers in the Internet age.
- Standardize AI-Power Trading Tools
Technology-powered broker platforms have the capability to offer precise trade insights through the analysis of trade data. A notable example is the PayBito Data, which assesses anonymous transactions, assigns weights, and provides rankings across the neural network. It gathers news from a multitude of sources, performs impact analysis to measure market sentiments, and relays buy/sell signals to individual traders. With time, the Engine becomes more efficient by learning from seasoned traders and market trends.
- Allow Algorithmic Trading for Every Trader
Modern exchanges have integrated algorithmic trading for all participants. Traders can use pre-built or customized trading bots with adaptive algorithms. These platforms offer quick bot set-up, with no downloads required, and a demo-testing option before investing. Traders can set up their bots within two minutes and access advanced trading strategies.
- Democratize Brokerage
The democratization of brokerage creates a level playing field and promotes transparency, preventing market crises. It enables investors of all backgrounds to access real-time market data and AI-generated insights, mitigating the risk of insider trading. Increased competition also limits manipulation and enhances regulatory oversight.
Brokering World Hunger Away: Brokering For a Cause:
Brokerage intermediaries can do more than just optimize profits and promote financial independence. They can also contribute to social welfare by supporting charitable causes and participating in campaigns like Brokering World Hunger Away. As part of this initiative, the PayBito exchange matches the earning commissions of brokers and donates the equivalent funds to feed starving children around the globe. This approach is sustainable, as it does not reduce the brokers' earnings.
Transforming Future Possibilities:
Legacy exchanges prefer institutional brokerage, which limits financial inclusion and access to AI-powered trading tools for non-institutional traders. To create a more equitable and fair financial marketplace, it's time to address the issue of unequal access to advanced AI tools and brokerage services. Sustainable innovation can make this change possible, ensuring that all investors have an equal chance to succeed and prosper.
About Raj Chowdhury:
Raj Chowdhury is the Managing Director of HashCash Consultants and Paybito. Raj pioneered the first interbank Trade Finance and Remittance implementation of Blockchain Technology between two of the largest global banks. Raj is an eminent voice in the Blockchain and Cryptocurrency space and actively engages with policymakers in this area. He is a contributor to Economic Times, Business World, CNNMoney and advises industry leaders in the adoption of Blockchain. He is a member of Asha Silicon Valley, a nonprofit committed to education for children in emerging countries. Author of the book 'The Dark Secret of the Silicon Valley', Raj is an investor in blockchain and cryptocurrency companies and an active member of the philanthropic community.
Media Contact
Coleen Facete, Hashcash Digest, +14159662907, [email protected]
SOURCE PayBito
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